Leveraging Omnichannel Retailing for Customer Loyalty through Customer Lifetime Value: Is this the reality, or is this just fantasy?

Abstract

Scope: Many physical store-based retail businesses are establishing online stores to provide an omnichannel experience to customers. Omnichannel contributes with an immense supply of data, whereas, the physical store complements this data with its touch and feel aspect, especially for the home and consumer electronics industry. Due to the competitive nature of this industry, value-addition and long-term relationship building (key components of Customer Lifetime Value) are a necessity for home and consumer electronics business sustenance and are challenging to attain. Digitalisation in the omnichannel era of retailing is making retailers more informed about the customers’ journey and as a result, presenting an opportunity to add value and longevity to the customer-retailer relationship. This paper focuses on the contextual gap of these two elements in omnichannel and customer loyalty research by studying case companies Elgiganten AB, MediaMarkt and Kjell & Company as a representation of the Swedish home and consumer electronics industry. Purpose: The authors of this paper aim to find how leveraging omnichannel can cater for the challenge of customer loyalty which retailers in competitive industries are aspiring to. This study is done primarily from the retailer but also from the customer’s perspective, in the identification of ‘How do the home and consumer electronics goods retailers in Sweden work with customer loyalty to create value in the long term?’. Method: This paper adopted a case study approach to collect empirical data. The in-depth qualitative interviews with retailers and customers within Sweden by following an abductive approach. The selection process of the interviewees was convenience selection and the interview design was semi-structured. The transcription was done through an open-coding process and cross-case analysis was done further. A literature review and secondary research about the case companies were done to increase the validity and reliability of the study. Results: Although retail practitioners could not undermine the necessity of customer loyalty, even with the support of an omnichannel setting the attainment of long-term customer relationships is still under development. To inspire customer loyalty the retailers would need to have strong arguments for data personalisation (such as presenting as a value for customers) which is perceived as a way to leverage omnichannel strategy and as a result create a repeat customer base. There is a demand from the customer for ‘feeling valued’ in home and consumer electronics retail which can be an area of interest for future research in other retail businesses.